Alternatives to Filing Bankruptcy
It’s been said that bankruptcy should be a last resort – a way to handle your debt when absolutely nothing else will work. If you’re considering bankruptcy, but you haven’t explored any other alternatives, then you should look at other options before you make a final decision.
Credit Counseling
Bankruptcy law requires you to get credit counseling from a court-approved agency before you can file bankruptcy. You may be able to get back on track and make your minimum debt payments with the help of a credit counseling agency. They can negotiate a lower interest rate and minimum payment with your creditors to give you some room in your budget. If credit counseling doesn’t work for you, then you have 180 days to file bankruptcy before you would have to go through credit counseling again.
Debt consolidation could be an alternative to bankruptcy if your credit is good enough to get an unsecured loan to cover your debts or if you have home equity you can borrow against. Only consolidate your debts if you know you’ll be able to afford the consolidation loan payments. Otherwise, you might still have to file bankruptcy for the debt. And if you’ve used your home equity to consolidate debt, you won’t be able to get the debt discharged in bankruptcy.
Settling your debt can work if you can afford to put aside money every month that can be used for a settlement. When you settle your debt, your creditors agree to accept a lower payment as full satisfaction for your balance. Debt settlement isn’t guaranteed, as creditors aren’t required to settle your debts. If they believe they can get full payment from you, they won’t agree to a settlement. The amount you’d have to save each month depends on the total amount of your debt, but the goal is to settle your debt for at least 50% in three years or less.
Do Nothing
If you don’t have a steady income and you don’t have any assets a creditor could take from you, then you’re said to be judgment proof. That doesn’t mean you can’t get sued or that you should ignore a lawsuit. However, the creditor would have a hard time getting payment from you even if the court grants a judgment. Beware, most judgments are enforceable for several years. If the judgment creditor learns that your financial situation has improved, they can take you back to court for payment.
Evaluating the Alternatives
Bankruptcy isn’t a decision that should be taken lightly. It has long-lasting effects and can be difficult to recover from. But, bankruptcy was created for a reason – to give people a fresh financial start.
Related posts:
- Bankruptcy Can Be Beneficial
- Two Types of Bankruptcy for Personal Debt
- What Is and Isn’t True About Bankruptcy
- Comparing Debt Settlement to Other Debt Solutions
- What’s So Bad About Bankruptcy, Anyway?
- Benefits of Debt Settlement
- Starting a DIY Debt Settlement Program
- Advantages of Credit Counseling
- Debt Settlement Negotiations and Offers
- Filing For Bankruptcy Should Only Be a Last-Case Scenario
If you want to get out of debt, but aren't sure what your plan should be, then click here and read the debt consolidation plan.
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Debt is slavery, and the goal of this website is to help you get debt free.
If you want to get out of debt, but aren't sure what your plan should be, then click here and read the debt consolidation plan.
If you're serious about getting debt free, sign up for the free debt course that will help you lower your minimum payments, lower your interest rates, and get out of debt faster.
Get the course here:
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